A federal judge in Manhattan on Friday dismissed a civil lawsuit that sought to hold Binance, the world’s largest cryptocurrency exchange, and its founder, Changpeng Zhao, liable for transactions the plaintiffs say facilitated 64 attacks around the globe.
U.S. District Judge Jeannette Vargas found that the 535 plaintiffs - composed of victims and relatives of victims - failed to plausibly allege that Binance or Zhao "culpably associated themselves with these terrorist attacks, participated in them as something they wanted to bring about, or sought by their actions to ensure their success."
The plaintiffs attributed the attacks, which they said took place between 2017 and 2024, to foreign terrorist organizations they listed as Hamas, Hezbollah, Iran’s Revolutionary Guard, Islamic State, Kataib Hezbollah, Palestinian Islamic Jihad and al Qaeda. In their complaint, they sought to hold Binance and Zhao accountable for what they described as the transfer of hundreds of millions of dollars in cryptocurrency to and from these groups and for "billions of dollars" in transactions with Iranian users that allegedly benefited proxies responsible for the attacks.
In her ruling, Vargas acknowledged that Binance and Zhao may have had a general awareness of the exchange’s role in terrorist financing, but she said the record showed only that the FTOs or their affiliates had accounts on, and transacted on, the Binance platform in what she characterized as an arms'-length relationship. That, she concluded, did not meet the threshold required to show the defendants intentionally associated themselves with the attacks.
The judge also criticized the plaintiffs' filings for their length, describing the 891-page, 3,189-paragraph complaint as "wholly unnecessary" despite acknowledging the seriousness of the allegations. Vargas permitted the plaintiffs to amend their complaint.
Lawyers for the plaintiffs did not immediately respond to requests for comment. In court papers, Binance and Zhao reiterated their condemnation of terrorism. Zhao also accused the plaintiffs of seeking to "piggyback" on Binance’s November 2023 guilty plea and its $4.32 billion criminal penalty for violations of federal anti-money-laundering and sanctions laws in an effort to pursue triple damages under the federal Anti-Terrorism Act.
A spokesperson for the exchange said in an email that Binance welcomed the court's decision to dismiss the allegations and that the company "takes compliance seriously and has no tolerance for bad actors on its platform." Zhao’s lawyers had no immediate comment.
Context and next steps
With the court allowing amendment of the complaint, the plaintiffs retain the opportunity to file a revised pleading. The ruling resolves the current complaint but does not foreclose additional litigation if the plaintiffs proceed with amended allegations.